Time to put a price on pollution

July 6, 2007

By David Suzuki with Faisal Moola

Mention the concept of a new tax to politicians and most will run screaming out of the room to go vacuum their cars or mow their lawns — anything to avoid talking about an issue that they think could lose votes, no matter how sensible or reasonable the concept may be.

But that's going to have to change soon because we need to have a serious and open discussion about initiating a mechanism for pricing pollution — specifically carbon.

By now everyone's aware of the mounting challenges we face from global warming. The science, while still ongoing, is clear: The heat-trapping gases, such as carbon dioxide, we're pumping into our atmosphere from our homes, cars and industries are warming the planet and disrupting the climate. If left unchecked, the consequences will be severe — to our environment and our economy.

So it's in everyone's best interest to start curbing our carbon output. There are many ways to do this, but most experts agree that market-based solutions can play a critical role. Two such solutions are a cap-and-trade system and a carbon tax. Under a cap-and-trade system, governments put a limit on the amount of carbon that can be released into the atmosphere. Industries have to stay within their limits. Innovators who go below their limits can sell their leftover emissions as credits to those who go over the set amount.

Under a carbon tax, the more you pollute, the more you pay. Such a tax could be applied to all products or activities that have a substantial carbon footprint — producing and burning gasoline, coal and other fossil fuels, for example. This would encourage industries to become more efficient and reduce costs, while encouraging consumers to save money by being more environmentally friendly.

Recently, a report by the government-commissioned National Round Table on the Environment and the Economy found that, regardless of which mechanism we choose, the longer we wait to put a price on carbon, the more costly it will be. The report said that, because businesses and investors make long-term decisions about capital costs, like buildings, technologies and equipment, they need a clear idea where the government is heading: "In essence, inadequate and delayed communication by the government of a [greenhouse gas] 'price' could lead to substantial long-term economic costs."

Politicians have a knee-jerk reaction to taxation, as do many Canadians. However, I don't think Canadians feel taxes are necessarily bad, so much as they think wasting tax dollars is bad, and unfair taxation is bad. By its very nature, a carbon tax should be reasonably fair because it directly taxes the product that causes the harm and expense to society as a whole. The more you pollute, the more you pay. That seems pretty fair.

But Canadians would also revolt if they felt their tax money was being wasted. That's why it would be essential to dedicate the money gained from a carbon tax to developing and promoting more sustainable alternatives. Proceeds from a carbon tax could be put toward providing better public transit, for example, thus improving the service or reducing the cost of a more sustainable transportation option. For electricity production, proceeds from a carbon tax on say, coal, could go towards cleaner, renewable energy sources like wind.

Global warming has really changed the environmental discussion in Canada, and much of the world. Suddenly, people are much more aware of our environmental challenges and eager to get moving on sustainable alternatives. Government plays a key role in this movement, and if our federal government isn't already seriously looking into a carbon-pricing mechanism, it should be.